Brazil’s Vale Ships More Iron Ore, China Price Slips

By Dimitra DeFotis

Brazil mining giant Vale (VALE) is at the crux of an expected 6.8% rise in iron ore shipments in the third quarter, AB says.

The year on year comparison would bring shipments to 313.4 million tons, versus 310 million tons estimated last week, and 306 million the week before that. The latest estimate represents a 9.3% increase from the prior quarter. Here is more from analysts Paul Gait, Marion de Floris and Jonathan Absolon at AB, the former Alliance Bernstein, in their weekly monitor of real-time iron ore shipments by BHP Billiton (BHP), Rio Tinto (RIO), Vale, Anglo American (ANGPY ) and Antofagasta (ANFGF), who write:

“Vale shipments at double-digit growth rates. We forecast Vale’s shipments to total 95.6Mt this quarter (even higher than our estimates of last week of 94.7Mt), up 10% YoY. Despite the rapid growth, the company has reiterated its plan for a relatively slow ramp up of S11D, to prevent further price downward pressure. The Financial Times quotes Vale’s head of iron ore Peter Poppinga: “One thing the market is not getting right is how Vale wants to go about ramping up S11D (…) We decided for a phased approach where we will ramp up S11D not in two years but in four years.”

The iron ore price is slowing down. The price of the landed China iron ore has come down in recent days and is now in the mid $50s per ton. The acceleration of supply might have added some downward pressure on iron ore, but we forecast the price to remain around US$60 a tonne in H2 2016 and during 2017 on sustained Chinese demand and controlled expansion plans from the majors …”

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. The Barrons.com Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.